China’s Belt Road Initiative – It’s Huge

Chinese Spending Lures Countries to Its Belt and Road Initiative

By Bloomberg News

May 10, 2017

Chinese President Xi Jinping’s plan to revive an ancient trade route connecting the Middle Kingdom, Central Asia and Europe has morphed into a sweeping campaign to boost global trade and economic growth. While globalization is losing public support in the U.S. and Europe, Xi’s“Belt and Road Initiative” (BRI) has met with increasing acceptance from both developing and developed countries hoping to cash in on Chinese largesse.

China silk road 1

Hundreds of leaders and dignitaries from 110 participant countries will gather at a summit in Beijing this month to discuss the grand plan. Countries along the routes account for 16 percent of the global economy today and about a fifth of global trade. But with about 43 percent of the world’s population, China is betting that’s set to increase.

Indeed, China’s outreach seems to have no geographic limits, with New Zealand and South Africa among those to sign a memorandum of understanding (MOU) with China to jump on the “Belt and Road” bandwagon.

China silk road 2

From Bangladesh to Belarus, railways, refineries, bridges, industrial parks and much else is being built. In Colombo, a new city larger than Monaco is taking shape near Sri Lanka’s main port. With an estimated total investment of $13 billion spanning about 25 years, the new city is shaping up as the poster child for the China’s grand plan.

A freight route linking China’s eastern coast and London has already started operating. Stretching over 12,000 kilometers and passing through nine countries, the railway allows cargo to travel across the Eurasia continent in 18 days.

China silk road 3

But it’s not going to be all good news, if history is any guide. From Africa to Latin America, China has a checkered history when it comes to its foreign investments. In Venezuela, a high-speed railway project was abandoned. The Latin American country, also one of the largest recipients of Chinese lending, defaulted last year on a payment of principal in an oil-for-loan program due to a mounting economic crisis at home.

Even in Myanmar, where demand for Chinese money to develop infrastructure is huge, a $3.6 billion dam project was halted after local protests over environment concerns.

China silk road 4

Doubters claim the “Belt and Road Initiative” is all about China exporting its industrial overcapacity and seeking to generate new contracts for its bloated state-owned industries or worse, forcing more and more neighbors into its strategic orbit. Optimists see Chinese investment unlocking economic growth across a vast region with a young population. For Xi, this month’s summit is a chance to persuade a skeptical world that globalization indeed does have a new champion.

 

 

 

About prosperitysaskatchewan

Consultant on Saskatchewan's natural resources.

Posted on June 1, 2017, in agriculture, economic impact, miscellaneous, oil, other minerals, political. Bookmark the permalink. 1 Comment.

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